June 18, 2024

Consumer spending in restaurants softened in recent months

Restaurant sales softened in recent months, but the strength of the labor market will likely continue to support consumer activity.

Resilient U.S. consumers, who largely shrugged off rising interest rates to fuel the post-pandemic economy, may be starting to lose some momentum.

Eating and drinking places* registered total sales of $93.6 billion on a seasonally adjusted basis in May, according to preliminary data from the U.S. Census Bureau. That was down 0.4% from April and represented the lowest monthly sales volume since October 2023 ($93.4 billion).

Consumer spending in other retail sectors was also soft in May, though it held up slightly better than restaurants. Non-restaurant retail sales edged up 0.2% in May, which followed a 0.3% decline in April.

While overall restaurant sales dipped in recent months, average menu prices continued to rise. As a result, real restaurant sales lost ground relative to 2023 levels. After adjusting for menu price inflation, eating and drinking place sales fell to their lowest monthly level since April 2023.

Although restaurant sales softened in recent months, the underlying strength of the U.S. labor market will likely continue to support consumer activity in the months ahead. Employed consumers will spend money, and there is little concern that economic conditions will deteriorate to the point that there will be job losses in the near term.  

*Eating and drinking places are the primary component of the U.S. restaurant and foodservice industry and represent approximately 75% of total restaurant and foodservice sales. Monthly sales figures presented above represent total revenues at all eating and drinking place establishments. This differs from the National Restaurant Association’s sales projections, which represent food and beverage sales at establishments with payroll employees. 

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